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25 July, 2024
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Half a billion euro investment in digital transformation

The funds are available for the next five years, but we lack human capital, according to Kyriakos Kokkinos

Maria Eracleous

Maria Eracleous

Over the next five years, a little more than half a billion euros (€512 million) will be set aside for digital transformation. Deputy Minister Kyriakos Kokkinos explained at the State Ministry of Innovation project presentation that 23% of the Recovery and Resilience Plan is dedicated to digital transformation projects, i.e. around €282 million plus another €150 million which comes from national resources, plus €80 million for business innovation, primarily digital, means that the total amount of money available over the next five years exceeds $500 million.  The Ministry's budget is approximately 120 million for 2023, rising to 157 million in 2024 and 135 million in 2025. For the period 2021-2027, the National Programme Plan allocates €34 million to innovation, €35 million to internationalization, €30 million to research, €17 million to strengthening structures and capacities, and €34 million to collaboration and knowledge transfer. According to Mr. Kokkinos, the Foundation's funding programs have provided €30 million to start-ups and scale-ups over the last three years, resulting in €15 million in private capital leverage, the creation of more than 240 new jobs, and the funding of 104 companies. Simultaneously, a human capital gap has been identified.

Below average

"That is why, as part of the Recovery Plan, 35 million dollars are set aside for upskilling professionals in related fields," Kokkinos explained.

The latest DESI (Digital Economy and Society Index) data show that there is a significant digital skills gap, both among the general population (1 in 2 have no digital skills) and among science graduates. "Human capital is the most vulnerable. In terms of both expertise and numbers, we do not have enough professionals in the field. This is the challenge, which we must view positively as a learning experience." In particular, while 3.9% of university graduates in Europe work in science, the figure in Cyprus is 2.7%. As a result, we produce fewer scientists than the European average.  According to the Deputy Minister, the average workforce in the IT sector in Europe is 4.1%, while it is 3.1% in Cyprus. There are approximately 11,500 Cypriots and 16,000 Cypriots from third countries working in the IT sector. Not everyone needs to be a STEM (Science, Technology, Engineering, and Mathematics) graduate, but everyone should learn how to use technology. "That is why, as part of the Recovery Plan, 35 million dollars are set aside for upskilling professionals in related fields," Kokkinos explained.

In the middle

Cyprus was ranked 20th out of 27 in the previous DESI, demonstrating significant progress in connectivity, digital technology integration, and digital public services. Cyprus now aspires to be in the middle of the pack. In response to K's question, the Deputy Minister mentioned a desire to move up 3-4 places in this year's DESI. That is, to be in the 15-16 positions in the EU, while Cyprus can be in the top ten in three years. Kokkinos emphasized that the country is already ranked in the top ten for innovation and is the only country from Southern Europe on the European Innovation Scoreboard.  Since 2015, Cyprus has made the greatest improvement in the field of innovation at the European level. According to the European Commission's annual report on the European Innovation Scoreboard 2022, it ranked 10th overall, between Germany and France, having improved its performance by 38% from 2015 to 2022 and now belongs to the Strong Innovators category. The goal, as stated by the Deputy Minister, is for Cyprus to rank among the top 7-8 countries in the EU in this category.

What comes next?

The Deputy Ministry's primary focus is on e-government, service digitization, and electronic transaction facilitation. As the Deputy Minister stated, will be improved in the coming months with the addition of 500 new services. The portal already has 350 public services. The e-procurement system is also being reformed, though the transition will take two and a half years. By April, announcements about the Cyprus Equity Fund, incentives for digital investment funds, and accelerators for attracting investment funds from abroad for start-ups and innovative businesses are expected.  At the same time, the Cabinet has approved the establishment of an Innovation district at the State Fair in Egkomi, which will house start-up companies and university laboratories. Deputy Ministry Director Stelios Chimonas, for his part, stated that systems such as customs and e-justice are being implemented, while the plan for fast internet is moving forward, with a 35 million fund approved for connection subsidy vouchers, network expansion in underserved areas, and very high capacity, where there is no private interest.

[This article was first published in Kathimerini's 'Oikonomiki' edition and was translated from its Greek original]

Cyprus  |  technology  |  digital

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